well. it's technology innovation all the list of elements from around russia we've got the future earth covered. good afternoon welcome to capital account i'm lauren lyster here in washington d.c. these are your headlines for october eleventh two thousand and twelve the latest in the global rate cutting contest central banks of brazil and south korea cut rates

china has been easing to offset tight liquidity conditions we'll talk to dr stephen leeb about the impact on commodity prices plus he'll weigh in on the big picture resource and energy issues you are not likely to hear about in the u.s. vice presidential debates tonight and christine lagarde head of the i.m.f. and waded into the eurozone bailout for a saying greece should be given an extra two years to meet its budget target. what's driving high level leaders elected or not to really make sure greece stays in the eurozone and continues to service the debt no matter the pain domestically will discuss and will we see criminal charges for actions surrounding j.p. morgan's multibillion dollar trading losses will deal book reports federal authorities are using taped phone calls to build criminal cases here is what jamie diamond said of the london whale trading losses yesterday. which we are sure will be with the courts and also that. really it doesn't cost us to subsidize

a bank of your size running enormous risks and realizing huge losses whenever you feel like it we may have a little disagreement but we have a diamond mash up in banter of some of his best moments from yesterday's press event let's get to today's capital account. tonight is the first and last vice presidential debate of the two thousand and twelve presidential elections in the u.s. and as pundits talk about what's at stake tonight and candidates tell the american people what they think is most important for the nation is their dirty little secret that no one really talks about because for as long as i can remember citizens have been told that wars in the middle east in the persian gulf and oil

rich countries are for their security they were told that bailing out the biggest banks was really about protecting the real economy protecting main street from a financial fallout on wall street they've been told that the fed buying mortgage backed securities will help homeowners homeowners and the economy creating jobs and then spurring employment but is any of this true if warrants were driven even in part by a need to secure a depleting resource oil why would the government be spending that money on alternative energy at home if bailouts were about stemming the economic crisis why not bail out the holders of fraudulent mortgages if the fed wanted to help homeowners why when they set up lending facilities like they did with the banks lending directly to indebted households and mortgage holders well there's one possibility i think is pretty fair to say major industries big banks oil companies military contractors they want to protect the status quo they benefit from the status quo and is the dirty little secret that they're doing a pretty good job pulling the wool over the public's eye that what's good for them

is good for everyone helps no less by politicians in washington who get hefty contributions from these industries well joining me is stephen leeb chairman of leave capital management and author of the book red alert with talk of control of the world's energy supplies on the sidelines of the oil fields i'm sorry i don't know where that came from i think someone threw that in there scuse me but the bottom line is that we want to talk about the economic impacts of all of this so dr lee i know you and i have talked before about some of the large scale issues facing the united states resource issues energy. issues i really doubt that that's what the vice presidential candidates are going to focus on indeed abate tonight if you had to make your list of america's top priorities what would they be and do you think he will match up with what the vice presidential candidates will say well i mean i would just start with what's very obvious from the last fifty or sixty years of history i mean probably sixty five this country does best. in the wake of

massive spending on infrastructure and the best example would be world war two i mean world war two was a lot of things but it was also a major infrastructure product project at the end of the second world war this country was loaded with debt with government debt massive amounts of government debt but because we had such fast growth making use of all that infrastructure that we had created to fight that war we set the foundation for about twenty years of really strong economic growth no other great example would be our space program we put a man on the moon you know how many technologies came out of that it's come lists countless numbers another major infrastructure project was the interstate highway system and incidentally all these projects were done not by government but by government and industry working together yes there was a time when that was possible there was a time when we actually did spend together monies that made this country more

productive and now we have a golden opportunity to do exactly the same thing exactly what unfortunately china is beating us sat we have a golden opportunity to spend literally trillions of dollars on projects that are going to pay off not just for us but for our children our grandchildren our great great grandchildren are going to be able to set the stage for the twenty first century what are we doing ignoring it what am i talking about i'm talking about new energies and new technologies and in particular new entered. geez just one example china plans to spend over one trillion dollars just on an aspect of new energies namely the smart grid between now and twenty twenty they will spend probably close to a trillion dollars on water and then that doesn't include all the monies that they're going to be spending on developing let's say natural gas developing solar energy

incidentally solar likes which everyone makes fun of is one of the only energies that you could use that doesn't need water and water. that it is and you need that and a number of ways to produce energy so let's dive into a couple of the things that you just said because you gave a very good summation of kind of where you think we should be headed let's look at where we have been headed based on the spending that the government has done let's look at war spending and just to listen to what mitt romney for example in his recent foreign policy speech was saying he kind of sounded to me like he's trying to out hawk obama and obama the democratic president led the u.s. into war with libya escalated the war with afghanistan so when we're looking to the persian gulf in the middle east where do you think either president is leading us and in terms of what impact it will have on oil and energy and military spending will have on this country's already terrible finances i mean it has to have a bad impact

a terrible impact i mean basically i mean if you contrast us with the chinese yes the chinese are also spending money on military but it's really just to protect themselves and to you know assure that they can get what they think is rightfully theirs they're not spending money on military to go after other countries we are i mean they have money a lot of it i'm not saying that these wars are immoral or anything like that i mean i'm not a pacifist i mean you know some things that we do are really good things but let's think of america first let's think of what we need to spend money on the real war today lauren and i've used this. an analogy before the real war we should be fighting is the energy war who is going to control energy resources in the twenty first century because whoever controls energy resources in the twenty first century is going to control this century china gets it they get it in spades and you don't have to believe me just go to the internet just google china and alternative

energies and once you see this transition in china take place in november you'll see them you know start really building this out and even more accelerated pace and just coming back to china you talked earlier in the show about currencies coming down brazil and korea cut interest rates today i mean our interest rates can't go any lower i know you'd hate it if the there they cut theirs at like seven point two five percent you've got a long way to go before they're oh it's a long way to go before what is china doing as you rightfully pointed out they have eased but ever so little if you look at china's short term interest rates today they are significantly higher than their average over the past ten years ditto for their reserve ratios they're not easy and as a result their currency is now at nineteen year highs now why is china doing that here's my guess ok this is a guess but i think it makes a lot of sense they're doing that because the higher their currency goes the more easily it is for them to buy resources for oil everything that they're going to

need to build out this new energy infrastructure and this is a country that's thinking ahead and if we were really doing this right we would be having a debate between the president and a presidential candidate that would be saying well how do we convene the commission where do we start how much money can we spend on new energies you haven't heard any talk about that and if i could just go back to the first debate that i heard between romney and obama are shot at taking what excuse me yeah sure sure go ahead yeah i'm not taking sides at all but i will say. when romney turned to obama and said look you spend something like some small amount of money on green energies and he used that as a criticism as a criticism of the president i mean you just had to cringe you had to cringe what's our solution to the energy problem to frack to use water guess what water is a precious resource we don't have enough water to grow our crops and to frack at

the same time especially in the midst of a drought yet we just sort of and you made the point at the beginning of the show those in the status quo wants to maintain their position who's the status quo in the energy business big oil oil who loses who loses if green technologies start really getting a major footprint in this country big oil yes and that brings me let me let me get in here then dr lee because it brings me to since we're talking about big oil since we're talking about energy wars over the years there have been numerous critics that have talked about the u.s. being engaged in wars in the middle east in the persian gulf driven by oil driven by securing resources if you look back dick cheney is quoted talking about the concern of saddam controlling so many oil reserves in iraq and exerting pressure pressure with weapons on other areas and securing resources but if we're talking about securing resources is securing a depleting resource oil via costly wars that have been paid for with

a credit card is that really the best way to do it versus say investing heavily in what you're talking about at whole alternative energies is that a better cost benefit analysis lauren i have to say your rhetorical question is more articulate than my answer could be i mean clearly it's so senseless it's almost hard to you know to describe it i mean just one statistic ok in this everyone can realize people today are complaining about the cost of gasoline and i understand it's about four dollars for twenty four. depends where you are in this country but let's realize let's just step back for a second and realize that the developed world japan europe and the united states has experienced virtually no growth over the past five years yet yet. benchmark crude oil is selling at one hundred fifteen dollars a barrel and gasoline prices are near record highs now what that is telling you and

no one certain terms is there is massive scarcity out there if no growth no growth in the world cannot bring down oil prices nothing is really going to bring them down short of a massive massive depression and with every of central bank easing in the world as you pointed out massive depression is not in the cards maybe for the slow growth but basically just look at these commodity prices i mean look at the price of or a look at the price of copper look at the price of silver today they're all a many times higher than they were in the ninety's when the world was growing. like like gangbusters i mean you know you don't have to be brilliant you don't have to be a great economist to realize what's pushed these oil prices up what's keeping them as high as they are is the fact that they've become very very scarce hawse marginal cost for producing oil right now are near one hundred dollars a barrel that is just no way to run a business

a country or anything else trying to rely on a commodity where marginal costs are going up at double digit rates we need to turn around and look at ourselves and world up our sleeves and recognize we're in a war people don't have to die in this war but if we lose the war the consequences will be just as if we lost fighting war we will lose our century we will lose our way of life the stakes of that great yeah it will end the way that the u.s. arguably has been fighting that war has cost a lot of lives so the way you're talking about is much more humane too to make my moral point we are going to. a break i want to keep you on i want to talk about the impact of the recent rate cuts that we're talking about on commodity prices because we know easy money sometimes flows into them so stephen leeb author and chairman of leave capital management will be back in just one moment and still ahead we have a mash up of jamie dimon comments from yesterday the global economic conference you will not want to miss them but first your closing market numbers.

you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else and you hear or see some other part of it and realize that everything you thought you knew you don't know i'm target market is a big issue. even

in the years. it's never too late to start. try extreme paragliding. championship. or become a post on. the road to the more. welcome back in light of the vice presidential debates we're talking about what candidates are likely to be focused on and the economic costs of what they're not likely to be focused on we're talking to stephen leeb author and chairman of leave

capital management he's a commodities expert and resources arguably place so much of a role into what the country is looking ahead at but yet it doesn't get touched nearly enough by politicians so let's continue this let's take this though to a slightly different industry which is banking because i think we're fed a lot of lines from politicians about about the banking industry and what makes for a healthy economy we are told the bailouts were to save the real economy and we are told that q.e. and on all of these different q.e. programs have been to save and help the real economy q e three being most recent with buy mortgage backed securities to arguably help homeowners but my question to you if this was really about helping homeowners would never be more effective for the fed to set up some kind of lending facility like a maiden lane to more directly get that aid to mortgage holders as opposed to being a customer for the biggest banks and their bad mortgage backed securities i mean of course i mean there are so many ways we could directly help you know a lot of people in these in this country including you know dare i say taxing

people that are making ten million dollars a year a little bit more lot more i mean yes i mean there is an entrenched almost ruling class in this country which i it's it's unique at least to my lifetime unique to i think post-war history and they're getting more and more entrenched and you see what's happening laurin one reason they're getting more and more entrenched is the kinds of prices that are going up are exactly what we're talking about earlier gasoline prices food prices are going up and that's having a dramatic effect on people that really are not making a lot i mean the median family household income maybe sixty thousand dollars a year for a family of four and you know when food and energy prices go up you have to pay those bills and they're a big portion of your income. but if you're making a million dollars a year you don't really care you don't even notice how much you're spending at the tank so what is going on in this country then is that the rich are getting richer and the poor are getting poorer and that is just facts and that's not good for the

rich it's not good for the poor it's not good for anybody and to empower these banks to do what they're doing is not good for anybody how can that be good to give up you were talking about j.p. morgan i don't want to single them out but how could it be good to give a bank that much power when they could make a six billion dollar criminal mistake in front of the chairman's eyes not really does that make any sense at all it's a very matter what it seems to me that there is trickle down economics and this country in the sense that by the time the money trickles down to main street there is none left first of the feeding trough is wall street military contractors and oil companies or three examples you know i think it's almost worse than that and i'm really i'm not like a socialist or anything else i'll vote for whomever i think i could even vote for romney i'm not totally undecided but i would go one step further i think it's trickle up i think the money is that the poor have the less fortunate half as our

it's actually up to the wealthy because they're the ones that are buying the goods that end up in the wealthiest hands there's no savings that the. the the less fortunate have i think it's almost trickle up it's not trickle down if you're not going to yeah it is a great crimes lord have fall in like ten percent i mean that's an extraordinary number and that median income represents the income really of the typical american the income of the very very wealthy has gone up so if you just look at those two numbers median income income of the less fortunate going down in real terms income of the very rich going up i don't call that trickle down i call that trickle up the poor is a great point who are making a contribution to the rich and you know why. in the end the rich will pay all sold this is not good for anybody it's terrible for everybody because then you see unrest real quickly before we go is speaking of people that are seeing their quality of life decline one of the concerns with banks that are cutting rates are

not only the u.s. with the fiscal cliff but the eurozone and i want to bring up a chart of greece because we have a great one of g.d.p. going down while unemployment has gone up and we hear so many leaders sticking to their guns saying we're sticking to this greek bailout kind of regardless of what happens to the quality of life in the country do you think greece is better in or out or defaulting and staying in i think greece is probably better staying in the euro zone now that doesn't mean that the europeans are doing them staying with the euro but that certainly doesn't mean that the e.u. is doing them a favor or the eurozone is doing them a favor by you know attaching these conditions it's almost torture i mean it doesn't there's got to be a better way of doing it i mean i was talking actually i think to somebody at your station today who said well let greece default and start over again rewinded i mean the greeks are very hard working people yet we create this mythology around them is just laying around and say and getting sun no they work they can't help it they

don't have export industry like the germans did germans are the ones that are getting a free ride here lorn because their currency is artificially low if that if any of these countries back and this is why i don't think the euro will blow up because if any country comes out of the euro germany's economy collapses. of their own labor i completely hear you we're going to have to leave it there is dimitri kofi and if you were talking about he knows every fetter than almost anyone i know i really appreciate you being on the show and expounding on all of this with your insight dr steven lee of author and chairman of leave capital management.

all right let's wrap up with loose change because boy do we have some exciting for you so dimitri thank you for being here to talk with me more about what a magazine i love that i love yeah because we touched on this yesterday when our producer just dana got a question in to jamie diamond out j.p. morgan buying bear stearns but there were so many other comments that jamie dimon made that were just worthy of bringing up to really show his air of indifference his pompousness at times just total disrespect for the truth i want to play you some examples this starts with his response to i believe a priest or some kind of monk who was asking about the banks lending to faith based organizations. some of the same you know we're not could do it and it's not good for you either it's like selling you know too much liquor someone are going to have to drink at the bar whatever and so but i will give you all the help i mean some e-mail we have something like fifteen billion dollars of exposure to the riveters and had you know stuff like that to bounce around the make believe is fifteen million spain you can easily tell me get it down or get it down i have to do some

derivatives to number the people to about qwest to go and break up so this crisis is nothing to a classical banks were blamed for everything is keep them out of the process and you know that's kind of a mistake because it's like you're designing a hospital keep the doctors out one two or three together or three trillion dollars so for you almost the financial assets of america or. very big my democratic friends separate more relevant from economics set up the economic system is conducive to growth conducive to jobs could do said to g.d.p. and then we'll have a conversation about taxation i'm not going to give up and i love this country too much i'm not giving up we need to be a good corporate citizen. right if we even begin to meet you where you take a place i don't know there are so many great things i personally was so pompous i mean the fact that he compared himself to a doctor in the if the economy were a hospital that bankers would be the doctors the most important component in the in

the it insinuates that the banks are actually vital to health of the economy and arguably too big to fail once currently are not put right but like and then he was so pumped as is the way that he is like. there are some dirt on i get that right down just have to build up some other answer somehow homicidal i thought hearing some other stuff like in general is like how pompous he wasn't you also made some like to believe factually correct statements and just the whole thing was laughable the only real question that actually mattered was just seems alison's and it was because she literally set them straight up when you acquired bear stearns with the participation of fed that lit up immediately he was like oh it is like no no there's no mystery with the fed of favor with which is absurd i remember how he was running around just wearing his pants excited about the fact that he's going to buy bear stearns for two dollars a share in a psych he loved the whole idea so this is plain b.s. and you know the term fight the fed i feel like jamie diamond thinks that the fed

has nothing on him he fights a bet every time that he talks he can talk again about kiwi i was like oh the fed that's three trying to you know me to tell me as we have do you really have dollar bet as nothing but the really hilarious thing about that is that one of those assets those are the best with your securitized that i was talking about here buying off of your books but also the point is that there is that's capable of the leveraging that's like a vacuum all right so in talking to. the lives of the those assets or worth what they're worth. in their nominal value because the fed is there backstopping them all right this is this is absurd that's like the hall of mirrors the grand talks about it's the fact that you don't actually know what are the things worth because you've got a central bank and a banking system that's being propped up by plaiting asset prices so no one knows anything so him saying a trillion dollars this is like hocus pocus he's like i would be here you go yeah you know here's my you know there is derivative exposure that day what you're going to have to do i also like he this is

a common jamie dimon talking point when he says that glass deal had nothing to do with the financial crisis and he always brings up the firms that weren't investment banking commercial banking enterprises that failed and all of that but who was underwriting their loans who was providing those firms with funding the big banks right when he said that was one of the exactly who's talking about the whale trade he goes he goes are shareholders lost values like nobody else has thought you know why you care well sorry guy the reason why you're got your trader over there and one that is able to take those risks is because you've got a public backstop who we subsidize you every single day so that you can have an realized losses on your books and carry them all right and then every time you realize one ok real is the last until it's huge and then we're going to bill you out again and they're going to come back and this what i can't believe is that he's so he's got he's so pompous there's like no humility at all i guess zero well and i don't know why you think there's a doctor and he's you know he's jesus tell you explain this this is the divine right of bankers you think that he is using these whole holy and that's why it was so great that he spoke greek and father of the monastery and he said father i love

you the sixty what we what you'll do on that sixty out of your body well we're now in the digital e-mail where i'm god well leave it there that's all we have time for thanks for watching and be sure to come back tomorrow and in the meantime you can follow me on twitter at lauren lester you can like our facebook page and give us feedback at any shows you misstate you tube dot com slash capital account let us know what you thought of that jamie diamond match that you can get to. in h.d. on hulu and you can go have yourself a great. world . science technology innovation all the rest of elements from around russia we've got this huge earth covered.

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